Statutory Issue Paper No62R - Reinsurance Focus

Property and Casualty Reinsurance
SSAP No. 62R
CLASSIFYING REINSURANCE CONTRACTS
Was the contract entered into, renewed,
amended, or does the contract have an
anniversary date (i.e., multi-year
contract) during or after 1994?
Yes
Has the reinsurer assumed significant
insurance risk, both as to timing of risk
(including timely reimbursement) and
amount of insurance loss under the
reinsured portions of the underlying
contracts?
Yes
Is it reasonably possible that the reinsurer
may realize a significant loss from the
transaction?
Yes
The contract has transferred risk and
should be accounted for as reinsurance in
accordance with SSAP No. 62.
No
No
No
Yes
The contract would be “grandfathered”
and accounted for in accordance with
Chapter 22 of the NAIC Accounting
Practices and Procedures Manual for
Property/Casualty Insurance Companies
dated January 1992.
Has the reinsurer assumed substantially all
of the risk relating to the reinsured portion
of the underlying contract (i.e., the
reinsurer is in the same economic position
as the reinsured)?
No
The contract has not transferred risk and
should be accounted for as a deposit. Any
previously recognized gains and losses
should not be restated, and existing
balances should be reclassified as
deposits.
Does the contract only reinsure losses
from insured events that may occur after
the date the contract is entered into?
Yes
Account for the contract as a prospective
reinsurance.
No
Does the contract only reinsure losses
from insured events that occurred prior
to the date the contract is entered into?
Yes
Account for the contract as a retroactive
unless paragraph 31 exceptions are met, then
account for either prospective reinsurance or
as indicated.
No
Is it practicable to identify and account
separately for the prospective and
retroactive portions of a blended
contract?
No
Yes
Account for the prospective and
retroactive components separately.
© 2009 National Association of Insurance Commissioners 62-23